Sunday, February 21, 2010

The Admin Spin Team Keeps Frittering, While the Republicans Just Scream

After Scott Brown's election in MA it appeared to all reasonable folks that healthcare reform ("HCR"), at least an encompassing package, was dead. Put aside for a moment the rights or wrongs of such reform, can the decision on the part of the Administration to revive its hopes (and those who support it) HCR be defended? The political insanity defies explanation. While wonderful statistics can be sighted for HCR (i.e., first in healthcare spending 37th in results), is it the principle issue facing the country right now?

Sure, the country is in serious economic trouble, far more trouble than understood within the Administration or Congress. Put aside the empty ranting of the Republicans in Congress, the Administration has no one to blame but themselves. They are completely out-of-touch with the body politic and that said, the frightening thing is they seem wholly unaware of this fact. They seem to content themselves with the fact that a majority of Americans support HCR, but notably not either one approved by the House nor the Senate. Why do they continue then?

In my view, there are two primary reasons, arrogance and bad advice. Why doesn't a President, one with enough political chops to move from a first term Senator (with no House resume) to the Oval Office, get it? No one credibly argues it's a lack of brains, although some argue too many brains is at least equally problematical. How is it that someone within the Administration does not possess the President's trust to be able to tell him that he's off course and that those individuals within the Administration leading him so must go. It befuddles me how an Administration that has failed so horribly on its principle policy goals retains those who championed the failed policies (don't David Axelrod and Valerie Jarrett need to spend more time with their families).

On the Republican side, the 2010 election wins will be quite substantial, but what does that mean? I have no idea. The struggle for who leads the party is an open question. That is not to say the party is not without highly capable leaders, however I'm not so sure the right people are being thrust to the front. At this point there aren't enough balls on the field for all those rushing to the podium. Rather than substantive debate of the real issues facing this country, the Republicans will continue to scream about the Administration.

That said, is there any hope? I think so, although hope, I expect, won't come from the politicians. One thing for sure, the pain ain't over, not even close.

Monday, February 15, 2010

Update - Evan Bayh Called Obama This Morning

Ugh,how long does Rahm hang on, that said he isn't the real problem with the Administration. Rahm, is a pragmatist (okay don't yell at me), but Jarrett and Axelrod, are the real problems. Obama has his big decision moment, what does he do. My prediction, take the easy way out, fire Rahm and keep listening to Jarrett and Axelrod, a destiny with disaster. If Obama wanted to learn something he should have looked to the Carter administration. Obama must realize how incredibly ineffectual he looks. His personal personality will only last for three months.

The Implosion of the Democrats - Evan Bayh

Evan Bayh's decision not to seek another Senate term is shocking. He is a bright, reasonable Senator from a red state that had his most difficult possible opponent step aside last week (Mike Pence). Although admonished from the left, Bayh, represented the Democratic party of years gone by, that is, he was reasonable and thoughtful. Traits now deemed untenable by the idiots on the far left end of the Democratic party. A pitiful crew of zealots desirous of destroying the Democratic party as constituted way back in 2008.

Since Bayh's announcement, Mike Pence has reiterated his intention not to run for the Senate seat giving an open path to (current North Carolina resident?) Dan Coates. Coates, the former IN Senator, whose seat Bayh took when Coates "retired," must be jumping with glee. In my opinion, Coates is a mere placeholder for the Republicans based upon his inauspicious Senate history. Despite this, it's a deathblow as sorts to the Democratic party in Indiana.

The Democrats have no one in the stable with statewide recognition that will have a chance in 2010 given the present political environment. As such, the prospects of a Democratic victory, or for that matter even a close race are dim indeed. Word on the street is that Bayh announced his intentions to staff last Friday, but notified Harry Reid 25 minutes before his announcement. In many ways that is more shocking than the announcement itself. It indicates to me that he had no intention of being talked out of his decision. Word has it that his possible path is to run for governor in 2012, and if so, a Presidential bid in 2016. A lifetime away in political terms.

As I indicated above, the impact to the party and the President is severe, but will they listen? The party "faithful" no. The Administration is another matter entirely. The economy is in absolute shambles irrespective of what you hear from Washington or Wall St. The possibility of a significant downturn is significant, if not likely. What will the Administration do to stem the bleeding? The answer is unclear given the ineffectual leadership they have displayed to date. One thing is readily apparent, the loss of Bayh means the voices of reason within the Democratic party are even more muted. That said, will the Administration recognize the peril they find themselves in? Probably, but whether they have the leadership to effectively govern and get re-elected are open questions indeed.

In my view, the Democrats have seen the enemy and it is them. Yes, Mitch McConnell and his lieutenants, Boehner, Cantor, Pence and Ryan deserve credit (politically) for remaining steadfast. The larger question is what the economy will look like once they regain power in Congress (whether in fact majorities or certainly more significant minorities) and who will lead the party. Both are formidable challenges and the stakes enormous.

Saturday, January 23, 2010

Democrat and the Obama Administration Stumble Along

The Administration, in reaction to the stunning defeat in Massachusetts, launched an ill-conceived attack on the banks resulting in a steep drop in stock markets this week. The Obama administration came into office with a unique situation. A malaise financial lay over the country (note, that despite Democratic claims such clouds remain), and the Democrats were given the Presidency, significant control of the House and a filibuster proof 60-40 majority in the Senate. Basically, the reigns of power rested with the Democrats, and the rudderless administration began their vault into ineptitude.

First, they began with their abdication of the "stimulus" plan. Instead of leading the process, they ceded control to Congress. A Congress who failed to understand the severity of the situation that the country was in. Instead, these geniuses decided on a $787 billion dollar boondoggle. The complete lack of leadership on the part of the Administration was stunning at the time, in retrospect, it appears almost criminal. The package has done little to stem the tide of recession, and of course the Washington clowns are now planning "stimulus" 2. Now as the situation is more dire economically and politically, the second "stimulus" will be little more than state bailouts and extensions of unemployment benefits.

Yes, indeed there were intervening problems. Despite the Administration's ridiculous claims that unemployment would stay at 8%, anyone with economic sense knew that was an absurd claim. Moreover, the overheating of the Chinese economy certainly had a impact on market declines this week. That said, it does not excuse the hubris, if not ignorance that has thus far characterized this Administration. In the face of a cataclysmic downturn in the US, the Administration decided to push forward with an agenda developed in the early 2000's. The results are not shocking.

The current tact of the Administration is naked populism, not the President's long suit. How long that strategy will be promoted and to what effect are unclear. What is readily apparent is that the Democrats are lost and the Republicans have no plan. As one person put it earlier this week, I have never been so disappointed in our politicians in my lifetime. Our politicians are incredibly out of touch with what's going on in this country. Money was spent recklessly, regulation was ignored and promises were made under the flawed notion that basic economics did not apply. I am beyond disgust.

Tuesday, December 15, 2009

The Hits Just Keep Coming - One Set of Rules for You Another for the Banks

In the latest abomination the Obama administration has changed tax law for Citibank. Not to belabor the technicalities, but US tax law generally limits a taxpayer's ability to utilize operating losses to offset prior or future income. The limitation is operational where there is a change in control. The disposal of the federal government stake of approximately 34 percent of Citi combined with the equity offering runs into this problem. But as if by a king's decree the Obama administration is pretending as though the limitation doesn't exist in Citi's case. The impact is only $38 billion, yes $38 BILLION. This is beyond obscene, I think it's illegal. Now mind you I just learned this so I need to investigate it further, but I can't imagine how else it could work (I am a tax attorney). Essentially, US taxpayers have just bailed out Citi to the tune of another $38 BILLION, and no one's the wiser. Are you kidding me. This is beyond the pale.

Wednesday, December 09, 2009

The Mess That is Our Government

I am beyond disgust. What has happened the last week. Obama finally talks about jobs and then sources say he'll fund it with TARP funds. The knucklehead Harry Reid gets some semblance of a health care bill through (although it's ultimate prospects remain unclear). All this followed by the EPA's display of hubris, by saying if Congress didn't act that they'd put forward their own onerous version of cap and trade (put aside the ridiculously long amount of time that would take). This idiocy is only rivaled by the inanity of the loyal opposition. The Republicans say nothing meaningful.

The only conclusion I can draw is that they are completely out of touch with reality. It is shocking, simply shocking that all these idiots can do is either try to shout the other side down or trying to push forward a laundry list of political priorities irrespective of the economic reality we find ourselves in now. I have always been a political afficiando, but never have I felt so entirely voiceless. The situation is glum indeed.

Sunday, November 29, 2009

Retail Numbers are Universally Disappointing

Initial retail sales figures have come out for Black Friday and they were poor and below most forecasts. Before we get to the numbers let's challenge the prognosticators. Estimates for this year's retail sales on Black Friday generally were strongly favorable when compared to the cataclysm of 2008. What world are these prognosticators living in? The facts are hard to avoid, yet the estimates seem based upon the foolish notion that American consumers will continue to ignore reality despite 17% unemployment, 1 in 4 mortgage holders underwater and an unsure retirement lying in front of them. How can this be, haven't we moved to a "new normal" and assuming we have (I do), when are analysts going to catch up. I feel like they spend way too much time watching the happy talk on CNBC.

Initial estimates show retail sales increased .5% over last years, but the Northeast numbers showed a 5% decrease from the paltry 2008 numbers. How can that info be spun positively, frankly, I have no idea. I don't doubt, however, that the bulls and the senseless cheerleaders on CNBC will attempt to do so.

Thursday, November 26, 2009

Dubai Default

On our holiday the financial world took its first step back to reality as Dubai asked its lenders for forbearance on billions of dollars of debt. Dubai's recent building have been nothing short of incredible, if you aren't sure (oh shucks, even if you are sure) look at this . Well in the happy-happy land reflected in recent stock market movement, this has caused an enormous impact while we gorged ourselves on great homemade food (at least I did). The dollar rose as did the Yen as the Euro and Pound were, well pounded. This is the flight to safety that market bears warned about.

The Greek stock market was down 7 percent (another potential default risk), while most of the other European markets were down roughly 2 percent. But the full impact hasn't all been accounted for yet. The closure of the US market certainly cushioned the fall in equities and the shortened day in the US markets tomorrow (and low volume driven by the lack of market participants) may tamp down the impact tomorrow, but the long-term implications remain intact. The short dollar trade has been oversold (at least in the near-term). This fact, not sustainable increases in corporate earnings have driven the market to regain more than 60 percent of the market losses sustained. A return to the dollar as the safety currency may be exacerbated by a short squeeze of an overplayed trade.

The foregoing may (I believe likely) will cause an enormous impact on the value of US equities. I don't buy the case sold by current market bulls. Consumers account for approximately 2/3 of the US economy. Between job losses, credit cards and underwater mortgages, it absolutely amazes me that analysts claim that we're going to have a good holiday season. Be real, folks are strapped. Whether this event or subsequent events cause a return to rationality I don't know. But one thing for sure things are different than they have ever been in my lifetime and certainly the clowns in Washington (all of them), simply don't get it. Disappointing.

Tuesday, November 24, 2009

New Spin on Health Care Reform

Let me start this piece by saying that health care reform is needed. There is simply no way it is acceptable that our per capita spending is first amongst industrialized countries, yet our results are 37th amongst the same group. Moreover, the rate of increase in costs is daunting.

That said, the latest spin is that not passing health care is worse for Democrats than passing something, anything. Given the precarious state of our economy, I find that contention patently absurd. The two disparate bills generated by the House and Senate are fraught with problems. What the bills do display in abundance is the problems with our Congress and their lack of connection with body politic. Much has been made of the deal to get Senator Mary Landrieu to buy off on cloture. That seedy deal is normal Washington politics, headline benefit with little to nothing accomplished.

The fact is the Democrats are no where near a deal on health care and the Republicans have decided to take their toys and go home. This is not to say a deal won't get done, but the abomination that will emerge if it gets done, will be ever more frightening. The Republicans seem to be hoping this happens so they can hoist the Democrats on their own petard in the '10 elections. The lack of leadership is frightening, and the complete abdication of leadership from the White House is nothing short of shocking.

The spin that something no matter how fetid and obese is better than nothing at all is obscene. Our legislature cannot effectively legislate. Moreover, the Administration pitiful silence is deafening. Do they simply not get it, not understand what their jobs are?

Saturday, November 14, 2009

First Winter Storm on Its Way

Well the lovely November we've enjoyed thus far are about to end. The news stations are in breathy tones, although it looks like we are more likely to get mostly rain, of course the storm track could change. The weather outlook appears to track closely the rough ground that lays in front of the Administration. The jobs numbers are abysmal, much worse than the headline number of 10.2%, that number has been cooked up by administration's interested in happy talk regarding the US economy for almost 20 years. Health care is a mess and nothing is likely to happen before the new year. Cap and trade is even more of a disaster. Afghan policy remains in limbo, although that may change soon.

What is the administration to do? Although it's patently unclear how much impact any devised plan will have, they better quickly move toward creating jobs. While the effect of any change won't likely happen anytime soon, the failure to do something is clearly the road to folly. Because of its unwillingness to prioritize the economy, I think 2010 will be an unmitigated disaster for Democrats. The administration fell in love with their own press and decided to press long-held legislative priorities, irrespective of the scope of the problems they were walking into. But how, how could they have been so oblivious to the nature of the challenges facing the country. Simple answer, hubris, the same disease that infests the D.C. political class. UGH!